A Newcomer to the C-Suite: Chief Strategy Officers Steer Health Systems to the Future

A Newcomer to the C-Suite: Chief Strategy Officers Steer Health Systems to the Future

Lola Butcher
Apr 18, 2014

Chief strategy officers at Children’s Hospital of Orange County and MemorialCare Health System are helping their organizations grow in new directions and form critical partnerships that will benefit patients and the bottom line.

As their traditional revenue streams decline, some health systems are adding a new position—chief strategy officer (CSO)—to identify new opportunities, approaches, and partnerships.

“Healthcare is so dynamic right now and there’s a lot of opportunity, particularly for stronger organizations, to choose their own direction,” says Diane Laird, who serves as CSO of MemorialCare Health System, an integrated delivery system with six hospitals, a health plan, ambulatory surgery and imaging centers, and more than 200 care sites in Orange and Los Angeles counties. “The decision to have a chief strategy officer supports having a good process to evaluate those strategic opportunities and make good choices.”

While healthcare CEOs have traditionally been responsible for setting strategy, the emergence of new delivery and payment models, the downward pressure on reimbursement, and the increasing need for partnerships makes that more difficult than it has been in the past. Thus, the CSO position is emerging as a direct report to the CEO who makes sure that strategic thinking does not get short changed, says Elaine Bauer who joined Children’s Hospital of Orange County (CHOC) in April 2011 as the hospital’s first CSO.

“It’s critical for every CEO to be a good strategic thinker, but they may not have the luxury of time to be able to step back and delve into data deeply and to keep their fingers on the pulse of all the different things that are going on,” Bauer says.

Sharing a New Perspective

The CSO job description differs from one organization to the next, but all CSOs are responsible for helping their organizations with big-picture thinking and long-term strategy.

For example, Bauer’s experience as a long-time health system executive helps her maintain a bird’s eye perspective when considering what is best for CHOC. As she led a year-long process to develop CHOC’s seven-year strategic plan, she helped physician leaders, board members, and others maintain a health system perspective. “I helped the organization shift from thinking of itself as a free-standing community pediatric hospital to realize that we are a health system focused on pediatrics,” Bauer says.

The result of the new self-image: CHOC is expanding its geographic footprint by locating outpatient facilities outside the health system’s traditional Orange County service area, and CHOC is pursuing growth through partnerships with other organizations.

The CSO position at CHOC works through influence rather than fiat power. “By being part of the senior leadership team, I am able to find opportunities to interject systems-level thinking and say ‘How does this resonate with you?’ when I’m working with individuals and small teams,” Bauer says.

In addition to Bauer’s strategy work at CHOC, she is responsible for business development, including geographic and service line expansion, physician recruitment, and both internal and external physician relations.

Developing Partnerships

At MemorialCare, Laird is tasked with identifying strategies to grow the integrated delivery system. That includes monitoring the local market, understanding the trends that affect current and future healthcare business models, exploring potential partnerships, and advising the executive team about opportunities. She also retains responsibilities for MemorialCare physician relationships, including leadership of the physician group and the physician-services organization.

One of Laird’s first achievements as CSO was finalizing the creation of a partnership with University of California Irvine Health to expand access to high quality, cost-effective health care throughout Orange County and create new, innovative models of care that improve the health and wellness of the local communities.

UC Irvine Health is collaborating with MemorialCare Medical Foundation—its physician organization that includes a large medical group and IPA—to develop the new primary care centers, leveraging the foundation’s infrastructure and extensive expertise in physician practice management and operations. “The future success of payer contracting and population health and serving employers requires a broad geographic footprint,” Laird says.

MemorialCare has long been a teaching hospital for UC-Irvine Health residents, and the primary care partnership takes the relationship in a new direction. “This is a perfect example of unique new types of system partnerships that will benefit the community,” she says. “This new partnership is yet another building block for future collaboration between our organizations.”

Another achievement in her first quarter as CSO: MemorialCare joined an accountable care organization (ACO) with responsibility for Anthem Blue Cross members covered by a PPO plan. While MemorialCare has been engaged in an ACO partnership for HMO lives, this is its first ACO contract for PPO lives, presenting the opportunity to provide coordinated care to a subset of patients who traditionally navigate the healthcare system on their own.

Choosing a CSO

Laird says a CSO’s skills and experience are two important success factors, but choosing a CSO who can work well with the rest of the executive team allows healthcare organizations to capitalize on the CSO position.

“The CSO is not the person with all of the answers,” Laird says. “An organization should be really thoughtful in the selection process to make sure the CSO can be a vital member of the executive team of the organization. This is a facilitative leadership role—not a ‘We’ll send that person out there to make it all happen on their own.’”

Develop and implement planning processes for the organization’s vision, strategy, and direction, including short- and long-term strategies for achieving goals.

Develop and implement growth strategies and initiatives including managed care programs; service line development; collaborative arrangements with other healthcare systems, physician groups and payers; joint ventures and new businesses; and other efforts to improve healthcare programs in communities where the health system operates.

Serve as a strategy coach and thought leader for the leadership team as it adopts new care delivery models, non-traditional service lines, and new approaches to improve the health of the communities served.

Develop mutually beneficial strategies for physician partnerships and implement the functional and organizational relationships between the health system and its affiliated physician organizations.

Develop a strategy for responding to healthcare reform by staying current on national trends that affect the provision of service, expectations of quality, and financial performance of the care sites.

Monitor and analyze trends in the environment—local, regional and national markets— that affect strategies.

Analyze existing and contemplated cooperative ventures from both a business and strategic perspective.

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